So, we are still on the Tesco horse, but not completely. You see, I have made my case (a few times over), there are parts out in the open that I agree with, thoughts I had and one thought that is now casually stated in 19 words and they are getting slipped under the carpet of 1700 words: ‘but others point to less drastic solutions such as the sale of Dunnhumby, the data mining firm behind Clubcard‘. As we have seen an escalating wave of data issues all over the place, this one is suddenly for sale?
If we can believe some of the info that is out in the open, then we need to consider that Dunnhumby is holding onto 40-terabyte of data, considering the spread of Tesco and likely data collected form several other places, one could state that this is worth a few dollars. Yet, a complete sale seems almost ridiculous as the value (which some state is at 2 billion) cannot be matched by all but a few and there is every chance that they might not want this data. There is a second part to this, why sell the company, when, what I consider to be the wise decision, which was made in July 2014, to hold on to data and to sell data instead of buying it. There is a lot more to Dunnhumby (at http://adage.com/article/news/dunnhumby-time-ditch-demographic/239689/), There are however a few questions. I was unable to find an exact annual revenue list, but several sources place it over 300 million, Tesco gets a nice slice of that, so as we see that the total profit will slump even further without Dunnhumby, why sell it? Yet, Dunnhumby is also a risk to Tesco. Not unlike the growing spree of Tesco, Dunnhumby must simmer down and not drastically overextend itself. It is nice to be in so many places, yet consider the heavy beating market research has taken for well over 3 years now. Even though Dunnhumby is starting to chomp on the pie slice that Nielsen has had for a long time, yet Nielsen as its own share of innovators, it only takes one new idea from Nielsen to change the direction of interest. Dunnhumby still has the advantage with data and the way it is collected, but that will not last, then what will they do? Yet, that is for the future, which is not for the now, but must not be ignored. These simple facts give ample reasoning to the question why to sell this part?
Consider the consequences of Tesco no longer getting a slice and having to purchase data and research at premium, not at internal cost. I feel certain that this picture has not been fully investigated. I will add to this that the idea of handing over 40 terabyte seems to the worst possible decision in a long line of dubious actions. This of course gets me back to the original ‘hidden’ sentence and the use of ‘less drastic solutions’, so who are these ‘others’? People hoping to get in under the radar?
Are those suggesting it serving anyone else but ‘self’? Not asking that question seems to be wrought with questions too, which makes me wonder why that one sentence was added as some ‘inbetweenie’. In addition, some might remember that article less than a month ago on the Tesco Air Fleet, yet, we have seen very little in regards to Kansas Transportation. The total of bills should be decently staggering as the last number I saw in one of the papers placed the cost at almost 10 million a year add to this the value of 60 million and we are now at 25% of the inflated amount. An additional issue is that there is almost ZERO visibility for Kansas transportation, when we consider the need for profit, why was this fleet not used to get additional revenue, instead of just leaving the planes all covered up. Would such an operation not need serious web presence?
So, as we see that several sides of Tesco operations that are not part of the Core, we see that visibility is not really a real act, which makes me wonder about the reason for getting these planes in the first place, what do these cost cover, or perhaps a better implied question is: ‘what else are these costs covering up?’
I do not pretend or imply to have the answers, but I am surprised that the article did not ask these parts either. It is nice to see the list of people who might be on the list of Chairman wanted. I definitely know a good one, but I will refrain from stating this here in the open.
One little bit of advice I do leave here for Dave Lewis. If you truly want to get this ball rolling into the profit direction, then forget about the quick solution, that one will not happen. The track is wrought with both angers and risks, but the safest road is also the risky one. On your next flight, I suggest you watch the 1953 classic ‘Wages of Fear’; it is the road you are likely about to head on. Not by bringing the nitro-glycerine (if so, kudos to you) or going for the term ‘boom goes the dynamite’, but for the road that requires you to nip at the heels of Aldi and going to low profit road for some time to come, to beat them in that game, you will require both the Teradata sized files of Dunnhumby as well as their hopefully available creative view. You need to return to the core business and take that into a different approach to the customers your predecessors seemed to have forgotten about. From there Tesco will return to strength and stability, one small step at a time. It just requires a few good investors to stick by you and they will see that with faith this journey will end up being a reward for them too.